Turkey Business Confidence

Turkey: Business confidence slides in December

December 28, 2015

Positive spillovers from November’s conclusive parliamentary elections are starting to fade and the Real Sector Confidence Index published by the Central Bank moderated in December. The index fell from November’s 105.2 to 102.2 in December. Nevertheless, business confidence remains above the 100-point threshold and indicates an optimistic outlook for business conditions.

December’s result showed that businesses were more pessimistic regarding the general business situation in Turkey as well as the expected volume of output for the next three months, which hit a two-year low. Moreover, export orders for the coming three months and job prospects declined to a one-year low in December. In contrast, stocks of finished goods climbed to a 13-month high, while the total amount of orders over the past three months and fixed investment expectations both recorded mild gains compared to the previous month.

FocusEconomics Consensus Forecast panelists see fixed investment experiencing a 2.6% expansion in 2015, which is up 0.1 percentage points compared to last month’s estimate. In 2016, panelists expect investment growth to accelerate 2.5%, which is also up 0.1 percentage points from the previous month’s forecast.

The current account balance recorded a USD 2.8 billion surplus in October, up from September’s USD 1.8 billion surplus and a marked turnaround from the USD 3.8 billion deficit observed in the same month last year.

According to data released by Turkstat on 10 December, the Turkish economy lost further steam in Q3, amid significant financial market and exchange-rate turbulence, soaring inflation and higher interest rates during the period.

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